There’s a new draft topic on the Team System User Education blog for your review. It provides a procedure for creating an MSBuild task to build a Visual Studio setup project using Team Foundation Build. Please take a look at it, if possible - try it, and then provide any feedback you may have in the comments of the article.
You can customize Team Foundation Build by adding either custom tasks or by using MSBuild tasks that are executed at a specified point during the build process. This topic explains the steps that are required to customize a build type to use MSBuild Exec task to build a Visual Studio setup project.